Sen Hillary Clinton: Airbus tanker may “undermine” US competitiveness

Also overheard at yesterday’s nomination hearing for the new chief of staff and secretary of the air force: General Norton Schwartz and Michael Donley, respectively.

HILLARY CLINTON: I was struck whenthe spokesperson indicated that the air force could not and did not take intoconsideration the impact of the [KC-X contract] award on the industrial base. … Title X requiresthe air force to do that …

MICHAEL DONLEY: My generalobservaition is we live in a global marketplace. Attempting to go with US sources only inparticular situations where it seems to advantage one company over another isreally sort of a temporary perspective on where all of these companies are headed. Thisis an international aerospace [sic] and an international business

CLINTON: Well,Mr. Donley, then it won’t surprise you to hear that I disagree. But moreimportantly than my disagreement are the very specific requirements withinTitle X, subtitle A, part 4, chapter 144, section 2440, which reads: ‘Thesecretary of defense shall [ed: proscribe] prescribe regulations requiring consideration of thenational technology industrial base in the development and implementation ofacquisition plans for each major defense acquisition program’. So I wouldappreciate receiving in writing each of you the specific answer to my questionin relation to Title X.

I’m verywell aware that we live in an international economy. I’m also extremely consciousof the impact of decisions made by our government with taxpayer dollars that undermineour competitiveness for the long-run and eliminate jobs and thereby underminetechnical skill acquisition in a way that will come back to haunt us. So thisis something I take very seriously.

The whole tanker deal is starting to look like the Zimbabwe election. You go through the process, and it all appears above board, but you will keep going round and round and it will never end until the favoured supplier gets the contract. Everyone proffers seemingly plausible objections – yet the real issue remains unsaid. Supplying tankers to the US defence force is reserved for Boeing.

Yes the long term prospects could be frightening… The Europeans might decide to spend billions on a transport plane with half the capability of existing US transports, and then dictate a European engine for it when a suitable US/Canadian engine exists…

Or they might create a multi-billion dollar satellite navigation project (which will charge for its services) when they can get GPS for free…

Or they might institute rules that European space missions must use European launchers…

Or they might even open up fighter competitions in countries that had previously committed to JSF!

There’s not a single industrialized country that is not interested in promoting its own defense industrial base. That’s obvious to anyone that follows the defense industry. The idea that outside of the U.S. there is this free market in defense articles in which all source selections are made purely according to economic efficiency or technical merit just doesn’t fit with reality.

Both Northrop Grumman and Boeing are US based companies. Both companies are sourcing a significant part of the total aircraft value from abroad. Boeing tries to shift some of its development and production to Japan. Airbus and EADS try to shift parts of development and production to the US! So looking at concepts like “the industrial base” is less than easy. But one observation is very easy to make: while Boeing was able to win a lot of Airbus A300 airline customers for the 767 two decades ago, 767 customers defected by the wholesale to the A330 later. And most other nations selecting tankers opted for the A330 too. Senator Clinton is lobbying for an aircraft which the professionals around the globe consider to be obsolete. But at least she requests the order “for the industrial base” – and not for “the American warfighter”. Since those men and women who risk their lives around the world would possibly request the most modern equipment – and the most capable. If they only were asked!

Let’s be fair. Every nation has its own comfort zone on how much they’re willing to outsource their industrial defense capability. The US has not been forced to make a lot of these decisions until very recently, and now they’re all coming at once. You can understand why it’s open for debate.